SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C  20549
                                    FORM 10-K

   For the fiscal year ended December 31, 1997  Commission file number 1-3632

   (Mark One)
   (X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES       
        EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

   For the fiscal year ended December 31, 1997
                                      OR
   ( )  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES   
          EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
   For the transition period from _________________ to ___________________

                            INTERSTATE POWER COMPANY               
             (Exact name of registrant as specified in its charter)
            DELAWARE                                     42-0329500        
   (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                   Identification No.)

   1000 Main St., P.O. Box 769, Dubuque,                 52004-0769
   (Address of principal executive office)               (Zip Code)

   Registrant's telephone number, including area code    319-582-5421   

   Securities registered pursuant to Section 12(b) 
   of the Act:
                                                  Name of each exchange on
   Title of each class                              which registered     

   Common Stock Par Value $3.50 Per Share       ) New York Stock Exchange 
                                                ) Chicago Stock Exchange  
                                                ) Pacific Stock Exchange  
    
   Securities registered pursuant to Section 12(g) of the Act: N O N E
    
        Indicate by check mark whether the registrant (1) has filed all
   reports required to be filed by Section 13 or 15(d) of the Securities
   Exchange Act of 1934 during the preceding 12 months (or for such shorter
   period that the registrant was required to file such reports), and (2) has
   been subject to such filing requirements for the 
   past 90 days.    Yes  X  .      No     .

        Indicate by check mark if disclosure of delinquent filers pursuant to
   Item 405 of Regulation S-K is not contained herein, and will not be
   contained, to the best of registrant's knowledge, in definitive proxy or
   information statements incorporated by reference in Part III of this Form
   10-K or any amendment to this Form 10-K. [ X ]

        As of March 1, 1998 the aggregate market value of the voting stock
   held by non-affiliates of the registrant was $347,821,588.            

        Indicate the number of shares outstanding of each of the issuer's
   classes of common stock.
                                                                    Shares
                                                                  Outstanding
                                                                    March 1,
                                                                      1998  
        Common Stock Par Value $3.50 Per Share                      9,763,413

        Documents incorporated by reference - portions of the Exhibit EX-13
   are incorporated by reference in Parts I, II and IV.

   <PAGE>

                            INTERSTATE POWER COMPANY
                          1997 Form 10-K Annual Report
                                Table of Contents

                                     Part I
                                                                       Page
   Item 1.   Business                                                     1
                General                                                   1
                Construction Program                                      1
                Electric Operations                                       1
                Sources and Availability of Raw Materials                 2
                Duration and Effect of Electric Patents and Franchises    3
                Electric Seasonal Business                                3
                Working Capital Items                                     3
                Electric Governmental Regulations                         3
                Electric Competitive Conditions                           5
                Other Sources of Power                                    6
                Other Electric Operations                                 7
                Gas Operations                                            7
                Gas Sources and Availability of Raw Materials             8
                Duration and Effect of Gas Patents and Franchises         8
                Gas Seasonal Business                                     9
                Gas Governmental Regulations                              9
                Gas Competitive Conditions                                9
                Dependence of Segment Upon a Single Customer             10
                Research and Development                                 10
                Electric and Magnetic Fields                             10
                Environmental Regulations                                10
                Year 2000                                                12
                Employees                                                12
                Accounting Matters                                       13
   Item 2.   Properties                                                  13
                Electric Properties                                      13
                Generating Stations                                      14
                Gas Properties                                           15
                General Properties                                       15
                Titles                                                   15
   Item 3.   Legal Proceedings                                           15
   Item 4.   Submission of Matters to a Vote of Security Holders         16

                                     Part II

   Item 5.   Market for Registrant's Common Equity and Related
                Stockholder Matters                                      16
   Item 6.   Selected Financial Data                                     17
   Item 7.   Management's Discussion and Analysis of Financial 
                Condition and Results of Operations                      17
   Item 8.   Financial Statements and Supplementary Data                 17
   Item 9.   Disagreements on Accounting and Financial Disclosure        17

                                    Part III

   Item 10.  Executive Officers of the Registrant                        18
   Item 11.  Executive Compensation                                      18
   Item 12.  Security Ownership of Certain Beneficial Owners and 
                Management                                               19
   Item 13.  Certain Relationships and Related Transactions              19

                                     Part IV
   Item 14.  Exhibits, Financial Statement Schedules, and Reports 
                on Form 8-K                                              19

   <PAGE>

                                     PART I

   ITEM 1.  BUSINESS

        (General)

        Interstate Power Company (the company or IPC), is a public utility
        incorporated in 1925 under the laws of the State of Delaware.  The
        company is engaged in the generation, purchase, transmission,
        distribution and sale of electricity.  It owns property in portions
        of twenty-five counties in the northern and northeastern parts of
        Iowa, in portions of twenty-two counties in the southern part of
        Minnesota, and in portions of four counties in northwestern Illinois. 
        The company also engages in the distribution and sale of natural gas
        in Albert Lea, Minnesota; Clinton, Mason City and Clear Lake, Iowa;
        Fulton and Savanna, Illinois and in a number of smaller Minnesota,
        Iowa and Illinois communities, and in the transportation of natural
        gas within Iowa, Illinois and Minnesota, and in interstate commerce.

        For information pertaining to industry segments and lines of business
        please refer to page 28 of Exhibit EX-13.


        (Construction Program)

        The table below shows actual construction expenditures for 1997 and
        estimated expenditures for the period 1998 through 2002:
    
                                      (Thousands of Dollars)
             1997 Actual                   $28,698
             1998 Est.                     $31,274
             1999 Est.                     $42,520
             2000 Est.                     $46,566
             2001 Est.                     $37,486
             2002 Est.                     $39,726

        Current projections of construction expenditures for the 1998 and
        1999 periods do not indicate any need for permanent financing.

        Refer to (Environmental Regulations) on page 11 for additional
        information on construction expenditures related to compliance with
        the regulations of the Clean Air Act of 1990.


        (Electric Operations)

        Of the 234 communities served with electricity, Dubuque, Iowa, is the
        largest with a population of approximately 58,000.  Other major
        cities served are Albert Lea, Minnesota and Clinton and Mason City,
        Iowa.  The remainder of the communities served are under 15,000
        population, of which 193 are less than 1,000 population.  As of
        December 31, 1997, the company sells electricity at wholesale to 10
        small communities which have municipal distribution systems.  During
        1997, 3 firm municipal electric wholesale customers elected to
        purchase from other utilities.

        The estimated population of the company's service area is 340,000. 
        Six large industrial customers account for 33% of electric MWH sales. 
        A diverse mixture of residential, agricultural, and industrial
        customers constitute the remainder of the company's 165,707 electric
        customers.  

        There have been no significant changes since the beginning of the
        fiscal year in the kind of products produced, services rendered,
        markets or method of distribution.

        The facilities owned or operated by the company include facilities
        for the transmission of electric energy in interstate commerce or the
        sale of electric energy at wholesale in interstate commerce.

        (Sources and Availability of Raw Materials)

        Electricity generated by the company in 1997 was 94% from coal as a
        fuel and the remainder primarily from natural gas.  Future sources of
        generation are expected to be in the same proportions.  Approximately
        75% to 80% of the Company's coal requirements have been from
        long-term contracts.  These contracts have expiration dates ranging
        through August 31, 1999.

        The company has a contract for 450,000 tons per year of 0.5% sulfur
        Colorado coal for its Kapp #2, a 217 MW unit at Clinton, Iowa.  The
        contract continues through August 1999, and will allow the company to
        comply with sulfur dioxide restrictions mandated by the Clean Air Act
        Amendments of 1990.

        The company renegotiated in February 1998 a contract for 500,000 tons
        for 1998 for its 260 MW Lansing #4 unit.  Lansing Unit #4 requires
        low sulfur coal, which is being purchased in the Powder River Basin
        of Wyoming.  The coal is shipped by rail and then transloaded to
        barge at facilities near Keokuk, Iowa.  A contract with Orba-Johnson
        Transshipment Company, Inc., covers rail to barge coal transloading. 
        Coal required for generation at the Neal #4 unit, located near Sioux
        City, Iowa, and the Louisa #1 unit, located near Muscatine, Iowa, is
        contracted for by the operator, MidAmerican Energy Company, under
        terms of the Unit Participation Agreements.  

        The company will purchase coal on an annual basis for the Dubuque
        Power Plant and for Lansing Units #1, #2 and #3.

        The company owns 120 coal cars and has an undivided ownership
        (21.528%) in 372 coal cars in connection with Neal #4.  The company
        has an undivided ownership (4%) in 136 cars in connection with Louisa
        #1.  Coal requirements in 1998 will require using leased cars for the
        Louisa #1 coal supply.  

        The company relies on spot purchases of oil.  The company burned
        676,810 gallons of No. 2 and No. 6 oil in 1997 and has 6,477,000
        gallons of oil storage capacity in which to store adequate reserves
        during periods of high demand on refineries.  

        The company presently has interruptible natural gas available for its
        electric generation station at Clinton, Iowa through Natural Gas
        Pipeline Company of America.  At the Fox Lake and Dubuque plants,
        interruptible gas is available through Peoples Natural Gas Company. 
        There is no assurance that interruptible gas will continue to be
        available as fuel for electric generating plants.


        (Duration and Effect of Electric Patents and Franchises)

        The company owns no patents.

        The company has, in the opinion of its legal counsel, all necessary
        franchises or other rights from the incorporated communities and
        other governmental subdivisions now served, required for the
        operation of its properties.  With 195 electric franchises in effect
        in cities and villages, and with the majority of such franchises
        being for a term of 25 years, the renewal of such franchises is a
        continuing process.

        (Electric Seasonal Business)

        The effects of air conditioning in summer and heating in winter have
        a seasonal impact.  The air conditioning sales in the summer months
        are primarily related to the residential and commercial customer
        classes, however, the company does not meter air conditioning sales
        separately.  During the past five years, the highest and lowest
        average residential consumption in the peak summer month has been 960
        Kwh (August 1995) and 571 Kwh (June 1993), respectively, compared to
        824 Kwh (January 1997) and 602 Kwh (March, 1992) during the peak
        winter month.  Refer to the (Electric Governmental Regulations)
        section for a discussion of Iowa and Minnesota seasonal rates. 


        (Working Capital Items)

        Three of the company's generating stations are located on the
        Mississippi River at Clinton, Dubuque and Lansing, Iowa.  The coal
        supply for the three plants is delivered by barge during the shipping
        season (approximately April 1st to December 1st).  Refinements to the
        company's fuel delivery process have decreased the amount of
        inventory required to carry the company over the winter.  Coal
        shipments to the company's Neal #4 and Louisa #1 generating stations
        are able to continue through the winter as river transportation is
        not involved.


        (Electric Governmental Regulations)

        In August 1993, the company implemented a revised electric tariff
        structure.  The new tariffs give greater weight to the demand
        component of electric usage, and include a provision for a higher
        rate during the summer cooling season (June-September), but did not
        change the company's overall annual electric revenue.

        The company filed a Minnesota electric rate increase application in
        June 1995.  The application requested an annual increase of $4.6
        million (later adjusted by the company to $3.3 million).  Interim
        rates were not requested.  On April 10, 1996, the Commission issued
        an order allowing an increase in electric rates of $2.3 million. 
        Rates reflecting the increase were implemented in August 1996.  A
        Commission order issued December 16, 1996, allowed the company to
        recover approximately an additional $830,000 in 1997 applicable to
        the time period from the original order to the date when new rates
        were implemented.

        Minnesota and Iowa regulations require that utilities conduct energy
        efficiency and demand side management programs.  Demand side
        management expenditures applicable to the Minnesota jurisdiction in
        an annual amount of approximately $1.8 million are currently being
        recovered through rates.  Iowa jurisdiction tariffs provide for the
        recovery of demand side management costs incurred.  The 1990, 1991
        and 1992 DSM costs are being recovered over a four year period ($1.2
        million per year) beginning in October 1994. The 1993, 1994 and 1995
        DSM costs are being recovered over a four year period ($4.9 million
        per year) beginning in May 1997.  Cost recovery of the DSM costs for
        1996 and through September 1997 began in October 1997 being recovered
        over each of the next four years ($2.6 million per year).  Effective
        October 1997, DSM costs for the period of October 1997 through
        September 1998 will be recovered as they are incurred.

        In September 1997, IPC agreed with the Iowa Utilities Board (IUB) to
        provide Iowa customers a four year retail electric and gas price
        freeze commencing on the effective date of the Merger (refer to Part
        II Item 5 for additional disclosure).  The agreement excluded price
        changes due to government-mandated programs, such as energy
        efficiency cost recovery, or unforeseen dramatic changes in
        operations.  In addition, the price freeze does not preclude a review
        by either the IUB or Office of Consumer Advocate (OCA) into whether
        IPC is exceeding a reasonable return on common equity.  IPC also
        agreed with the Minnesota Public Utility Commission (MPUC) and
        Illinois Commerce Commission to four year and three year rate
        freezes, respectively, commencing on the effective date of the
        Merger.

        On September 30, 1997, the IUB approved a settlement between IPC and
        the OCA which provided for an electric rate reduction of
        approximately $3.2 million annually.  The reduction applied to all
        bills rendered on and after October 7, 1997.

        The company's electric rate tariffs provide for recovery of the cost
        of fuel through energy adjustment clauses.  These clauses are subject
        to revision from time to time by the regulatory authority having
        jurisdiction, and are designed to pass on to the consumer the
        increases or decreases in the cost of fuel without formal rate
        proceedings.  Purchased capacity costs are not recovered from 
        customers through energy adjustment clauses, but rather must be
        addressed in base rates in a formal rate proceeding.  In the
        company's Iowa electric jurisdiction, the company is required to
        return to customers any jurisdictional revenue from capacity sales to
        other utilities.


        (Electric Competitive Conditions)

        The Illinois Commerce Commission entered an order in 1993 determining
        that the company, and not Jo-Carroll Electric Cooperative, had the
        right to provide electric service to a freezer service plant near
        East Dubuque, IL.  Upon judicial review sought by Jo-Carroll, the
        Illinois 15th Judicial Circuit Court in 1994 remanded the proceeding
        to the Commission for further hearings.  The Commission entered an
        order on remand in 1996 further determining that the company, and not
        Jo-Carroll, had the right to provide such service.  In proceedings
        brought by Jo-Carroll for judicial review of the commission order on
        remand, the court affirmed the Commission's order and company's right
        to serve the freezer service plant and no appeal has been taken from
        that order.

        The National Energy Policy Act of 1992 (Act) addresses several
        matters designed to promote competition in the electric wholesale
        power generation market, including mandated open access to the
        electric transmission system. At the federal level it allows
        customers to purchase energy from alternative power suppliers and
        then pay the local utility a fee for delivery of the energy.  As
        legislation, regulations, and economic changes occur, electric
        utilities will be faced with increasing pressure to become more
        competitive.  The company cannot predict the long-term consequences
        of these competitive issues on its results of operation or financial
        condition.  The company has experienced difficulty in retaining
        electric wholesale customers which take service under one year
        contracts.  To date, 8 of the company's 18 firm municipal electric
        wholesale customers have elected to purchase their requirements from
        other utilities.  The net impact on the company's financial condition
        is not expected to be significant as these municipal customers are
        required to pay the company a wheeling fee for use of the company's
        transmission system to transport power from other utilities.

        The company's industrial rates generally compare favorably with those
        of neighboring utilities.  For the company's six largest industrial
        customers, the aggregate 1997 rate was approximately 3.3 cents per
        KWH. The company's favorable rates mitigate the incentive that these
        customers might otherwise have to relocate, self-generate or purchase
        electricity from other suppliers.  The company anticipates that its
        generating cost will decline slightly over the next several years as
        long-term coal purchase and transloading contracts expire and are
        renegotiated.

        The company currently has no competition from the same type of public
        utility service in the sale of electricity in any of the incorporated
        communities it serves.  In the States of Iowa, Illinois and
        Minnesota, territorial laws govern the question of possible service
        to customers in unincorporated areas, and such laws regulate
        competition in such areas.

        Laws and statutory regulations in the different states in which
        service is rendered provide, under varying terms and conditions, for
        municipal ownership of electric generating plants and distribution
        systems.  Certain franchises under which utility service is rendered
        give the municipality the right to purchase the system of the company
        within said municipality upon certain terms and conditions.  However,
        no such purchase option and no right of condemnation of the company's
        properties has been exercised and no municipal generating plant or
        municipal distribution system has been established in the territory
        now served by the  company during the past twenty-five years.


        The Iowa Utilities Board, the Illinois Commerce Commission and the
        Minnesota Public Utilities Commission have each approved tariffs that
        allow the company to offer interruptible electric service for
        qualifying customers.  The availability of this service provides
        price incentives to those customers having the ability to interrupt
        their connected load.  The primary objective of the incentives is to
        reduce the system peak.  The incentives also serve to retain existing
        customers and attract new customers.  In addition, the State of
        Illinois has passed electric deregulation legislation requiring
        customer choice of electric supplier for all customers by May 1,
        2002.


        (Other Sources of Power)

        The company has been a participant in the Mid-Continent Area Power
        Pool (MAPP) since March 31, 1972.  Membership in the Pool permits
        sharing of reserve capacities of the members which affects reductions
        in plant facilities investment for MAPP members.  The minimum reserve
        margin for participants in MAPP has been established at 15%.

        A new Restated Agreement was approved by the MAPP membership and
        after FERC review became effective November 1, 1996.  MAPP is now
        comprised of a Regional Transmission Committee (RTC), a Regional
        Reliability Committee (RRC), and a Power and Energy Market (PEM). 
        With open membership MAPP has gained several new members and includes
        investor-owned utilities, the United States (Western Area Power
        Administration), a Canadian system, public power districts, rural
        electric generating and transmission cooperative associations,
        municipal electric supply agencies, municipal utilities, and power
        marketers operating in Canada and the North Central region of the
        United States.  The Pool coordinates planning and reliability in
        Minnesota, Wisconsin, Montana, Iowa, Nebraska, North Dakota, and
        South Dakota.  The Pool also provides a marketplace for economic
        power supply in these States with an expanding influence in the
        surrounding States through new utility and marketer membership.  The
        MAPP Agreement was filed with the FERC and accepted as an initial
        rate filing effective December 1, 1972 and has been in operation
        since that time.  In 1995, MAPP implemented an intra-pool
        transmission service fee.  With an effective date of November 1, 1996
        the Restated Agreement, in addition to opening membership,
        implemented a revised rate schedule for transmission service for
        transactions with terms of up to two years.  The company has
        insufficient historical data to use as a basis for quantifying the
        potential maximum intra-pool transmission service fees that are now
        required under the Restated MAPP Agreement.  Current projections of
        maximum charges would be up to three times the level incurred prior
        to approval of the Restated Agreement.  MAPP is presently working to
        develop a region-wide tariff for transactions longer than two years. 
        The company cannot project the effective date nor the level of
        charges of that long term tariff.

        In addition to the MAPP membership, the company has interchange
        agreements with certain Missouri and Illinois utilities through 345
        KV transmission systems.  Future interconnections are planned to meet
        transmission requirements for the next ten years.

        In 1992, the company entered into three long-term power purchase
        contracts with other utilities.  The contracts provide for the
        purchase of 255 MW of capacity through April 2001.  Energy is
        available at the company's option at approximately 100% to 110% of
        the monthly production costs for the designated units.  The three
        power purchase contracts required capacity payments of $24.9 million
        in 1997.  Over the remaining life of the contracts, total capacity
        payments will be approximately $85 million.  The purchase power
        contract payments are not for debt service requirements of the
        selling utility, nor do they transfer risk or rewards of ownership.

        In Iowa the IUB has concluded that the capacity purchases were
        prudent and allowed recovery of costs through rates.  The rate
        structure approved by the MPUC does not provide for full recovery of
        purchased power applicable to the Minnesota jurisdiction.  The 1996
        rate order by the MPUC held that the company had 100 MW of excess
        capacity and disallowed recovery of approximately $800,000 annually.

        The company has not filed for rate recovery of approximately $2.5
        million of the purchased power payments in the Illinois and FERC
        jurisdictions.  The company believes that increased margins from
        sales growth in Illinois have largely offset the revenue deficiency.

        The company has contracts with several governmental power agencies
        whereby the company provides transmission service to their
        customer/members.  During 1997, the company either received, wheeled
        power or provided transmission service to customers of the Western
        Area Power Administration (WAPA), and Cooperative Power Association
        (CPA).  The company's contract with CPA also provides for payment by
        the company for mutually utilized facilities constructed and owned by
        CPA.

        The Company and Southern Minnesota Municipal Power Agency (SMMPA)
        prior to 1998 had a contract to compensate each other if over/under
        investment in the shared transmission system occurs.  That agreement
        has been terminated.  Effective January 1, 1998, SMMPA will be
        receiving transmission services from the Company under FERC open
        access transmission compliance tariffs.

        The company's contract with Central Iowa Power Cooperative (CIPCO)
        provides for compensation to each other if over/underinvestment in
        the shared transmission system occurs.

        (Other Electric Operations)

        The 1997 peak of 938,120 KW occurred on July 16 between 12:00 and
        1:00 in the afternoon.  At the time of its 1997 peak the company had
        a net effective electric capability of 1,310,600 KW.  Of this net
        effective capability, 903,300 KW was in steam generation, 113,500 KW
        was in combustion turbine and the balance was in internal combustion
        units and purchases.  The previous historical system net peak load
        for a sixty-minute period, of 1,010,821 KW, was reached on July 14,
        1995.


        (Gas Operations)

        The company supplies retail gas service in 41 communities and serves
        approximately 49,578 gas customers.

        There have been no significant changes since the beginning of the
        fiscal year in the kind of products produced, markets or methods of
        distribution.

        (Gas Sources and Availability of Raw Materials)

        The company purchases pipeline transportation capacity from Northern
        Natural Gas Company (NNG), Natural Gas Pipeline Company of America
        (NGPL) and Northern Border Pipeline Company (NBPL).  During 1997 the
        company purchased gas from non-traditional suppliers, i.e. producers,
        brokers and marketers, at market responsive rates.  FERC Order 636
        became effective in 1993.  Order 636 unbundled pipeline supply from
        its capacity.  Subsequent to Order 636, FERC continues to approve the
        tariffs of NNG and NGPL, but only with regard to capacity and storage
        rates, subject to change as rate cases are filed.

        Gas for the company's Mason City, Albert Lea and Savanna service
        areas is transported by NNG under capacity contracts for 36,338 Mcf
        daily, and for an additional 15,657 Mcf for the period November to
        March.  The majority, 26,999 Mcf, of the above capacity is from the
        producing areas of Oklahoma and Texas.  These contracts expire in
        October, 1999.  Gas is supplied by producers, marketers and brokers,
        as well as from storage services, to meet the peak heating season
        requirements.  The company had 15,170 Mcf/d of storage, with the
        necessary pipeline capacity, available for the 1996-1997 heating
        season.

        Gas for its Clinton service area is transported by NGPL under
        capacity contracts for 17,750 Mcf annually, with expiration dates of
        November 30, 1998, February 28, 1999, and two as of November 30,
        2001.  This gas is supplied by producers, marketers and brokers.  The
        company supplements this capacity with storage gas, which has the
        pipeline capacity embedded in its FERC approved rate.  The company
        had 10,000 Mcf/d of storage available for the 1996-1997 heating
        season.

        The company's 1997 total throughput level of 37,742,756 Mcf
        represents a 1.1% increase over 1996.  The total throughput was
        composed of sales gas (23.8%) and customer transportation gas
        (76.2%).

        During 1997, twenty-two of Interstate's customers transported a total
        of 28,743,907 Mcf of their own gas over the company's pipeline and
        distribution systems.  The customer owned gas was delivered by
        interstate pipeline companies for those customers' accounts to
        Interstate's town border stations.  The company subsequently
        delivered the gas to customers under tariffs approved by respective
        state commissions.  

        The company owns propane-air gas plants in Albert Lea, Minnesota and
        Clinton and Mason City, Iowa.  The daily output capacities are: 
        5,000 Mcf, 4,000 Mcf and 9,600 Mcf of propane-air mix gas
        respectively.

        (Duration and Effect of Gas Patents and Franchises)

        The company owns no patents.

        The company has, in the opinion of its legal counsel, all necessary
        franchises or other rights from the incorporated communities and
        other governmental subdivisions now served, required for the
        operation of its properties.  With 34 gas franchises in effect in
        cities and villages, and with the larger majority of such franchises
        being for a term of 25 years, the renewal of such franchises is a
        continuing process.


        (Gas Seasonal Business)

        The effects of heating sales to the residential and commercial
        classes of customers have a significant seasonal impact on the
        company's business.  The heating sales in the winter months account
        for over 95% of the total annual sales to these classes of customers. 
        The average consumption for a residential customer during the peak
        winter months is 18.8 Mcf compared to the average of 2.5 Mcf during
        the summer.  The average consumption for a commercial customer during
        the peak winter months is 90.5 Mcf compared to the average of 12.9
        Mcf during the summer.


        (Gas Governmental Regulations)

        The company filed a Minnesota gas rate increase application in May
        1995.  The application requested an annual increase of $2.4 million,
        including a return on common equity of 11.75%.  Interim rates in an
        annual amount of $1.5 million were placed in effect in June 1995.  On
        February 29, 1996, the Minnesota Public Utilities Commission (MPUC)
        issued an order allowing an increase in gas rates of $2.1 million. 
        Rates reflecting the increase were implemented in September 1996. 
        The Minnesota Department of Public Service (DPS) and the Office of
        Attorney General (OAG) appealed the Commission's decision.  The
        appeal was denied by the Minnesota Court of Appeals on February 18,
        1997.  On March 21, 1997, the Department of Public Service ad the
        Office of Attorney General appealed the decision of the Court of
        Appeals (and the Commission) to the Minnesota Supreme Court.  On
        January 8, 1998, the Minnesota Supreme Court upheld the MPUC initial
        decision allowing the company to recover $4.9 million of clean up
        expenses over a 10 year period.

        FERC order 636 provides a mechanism under which gas pipelines can
        recover transition costs from local distribution companies.  The
        company estimates its remaining share of transition costs will
        aggregate approximately $1.3 million payable in declining annual
        installments.  The company is recovering transition costs from
        customers. 


        (Gas Competitive Conditions)

        The company has no competition from the same type of public utility
        service in the sale of gas in any of the incorporated communities
        serviced by it.  Certain major industrial customers of the company
        purchase their own gas supply from others and have that gas
        transported by the company as described in the "Gas Sources and
        Availability of Raw Materials" section.  The Iowa Utilities Board has
        also issued an order covering unbundling of natural gas rates for all
        Iowa customers to be effective in 1999.

        One customer recently constructed independent distribution facilities
        to bypass the company's system.  The company is continually
        evaluating its bypass issue and developing policies to deal with
        future competitive conditions which could result from potential
        system bypass.  The customers most likely to bypass the company's
        distribution facilities are transportation customers.  At the present
        time the company has 22 gas transportation customers with total
        revenues of $2.8 million (5.1% of gas revenues and 0.8% of total
        company revenues).  Over 60% of the $2.7 million of revenues occurs
        in an area where the potential for bypass is considered to be
        minimal.  The loss of any one customer would not have a material
        adverse impact on the company's financial condition.

        (Dependence of Segment Upon a Single Customer)

        In 1997, 1996 and 1995, the company had no single customer or
        industry for which electric and/or gas sales accounted for 10% or
        more of the company's consolidated revenues.  In 1997, the company's
        three largest industrial customers accounted for 1,387,045,000 Kwh of
        electric sales ($45,770,000) and 26,369,000 Mcf of gas sales and
        transportation ($1,850,000).  The company's largest gas customer,
        which represents 36% of the company's total gas throughput, is
        committed by contract for the next four years.


        (Research and Development)

        The company has no full-time professional employees engaged in
        research activities and had no company-sponsored research programs
        during 1997, 1996 and 1995.  In the public utility industry, research
        is commonly and traditionally done by manufacturers of equipment,
        trade organizations to which the company belongs, and university
        research programs.  In 1997 approximately $645,313 was paid for
        research activities compared with $782,299 in 1996 and $1,054,925 in
        1995 and $1,072,871 in 1994.

        (Electric and Magnetic Fields)

        Electric and magnetic fields, a topic that has been an issue for a
        number of years, was clarified by a study of the National Research 
        Council.  The committee spent two years analyzing about 500 studies
        conducted since 1979, and concluded in its report issued in 1996 that
        there was no evidence to clearly prove electric and magnetic fields
        are harmful to health.  The company expects there will be continuing
        national debate as to whether or not electromagnetic fields are
        harmful to health.


        (Environmental Regulations)

        The company is subject to various federal and state government
        environmental regulations.  The company meets or exceeds the existing
        federal and state environmental regulations.  The Federal Clean Air
        Act Amendments of 1990 requires reductions in sulfur dioxide and
        nitrogen oxide emissions from power plants.  The most restrictive
        provisions relate to sulfur dioxide emissions.  Phase 1 of the Clean
        Air Act became effective January 1, 1995, while Phase 2 is effective
        January 1, 2000.  To comply with Phase 1, the company switched to low
        sulfur coal and installed low nitrogen oxide burners.  Phase 2
        regulations will affect approximately 87% of the company's current
        generating capacity and will require some, but not significant,
        capital, operating and maintenance costs beyond those required for
        Phase 1. 

        The United States EPA and the states have promulgated discharge
        limits necessary to meet water quality standards.  A National
        Pollutant Discharge Elimination System (NPDES) permit is required for
        all discharges.  The company has current NPDES permits for all
        discharges and meets or is within the range of required discharge
        limits.

        Early this century, various utilities including the company operated
        plants which manufactured gas for cooking and lighting.  The
        company's facilities ceased operations over 40 years ago when natural
        gas pipelines were extended into the upper Midwest.  Some of the
        former gasification sites contain coal tar waste products which may
        present an environmental hazard.

        In 1957, the company purchased facilities in Mason City, Iowa, from
        Kansas City Power & Light Company (KCPL) which included land
        previously used for a coal gasification plant.  Coal tar waste was
        discovered on the property in 1984.  In 1995, a settlement was
        reached with KCPL for sharing of costs to remediate the site.  As of
        year end 1997, soil remediation of the site is complete.  The
        company's total share of cost from 1984 to 1997 at this site was $2.7
        million.

        The company formerly operated a manufactured gas plant in Rochester,
        Minnesota.  Soil remediation was completed in 1995 and post-
        remediation groundwater monitoring is complete pending final review. 
        From 1991 through 1997, the company incurred costs aggregating $6.9
        million applicable to the Rochester site.  A rate order from the MPUC
        in 1996 allowed the company to recover $4.9 million of this expense
        over a ten year period.

        The company has identified an additional seven sites, as described
        below, which may contain hazardous waste from former coal
        gasification plants and has recorded an estimated liability
        applicable to the investigation of those sites.  The company is
        unable to determine, at this time, the extent, if any, of remediation
        necessary at these seven sites.  

        In Minnesota, the company owned or operated four manufactured gas
        plant sites: Albert Lea, Austin, New Ulm and Owatonna.  Potentially
        hazardous wastes associated with former coal gasification operations
        have been identified at each site.  The company incurred $0.2 million
        in investigation costs for these sites in 1997, and $1.5 million
        since the investigation process began.  In 1995 and 1996, the company
        received accounting orders from the MPUC which allow the deferral of
        investigation and remediation costs applicable to the Minnesota sites
        and further allows the company to seek recovery in a rate case.

        In addition, the company has identified three other sites: Galena and
        Savanna, Illinois, and Clinton, Iowa.  Potentially hazardous wastes
        associated with former coal gasification operations have been
        identified at these sites.  Little or no activity is expected at the
        Illinois sites in 1998.  In 1997, $3.8 million was expensed for
        estimated investigation and remediation work expected at the Clinton
        site in 1998.

        Previous actions by Iowa and Illinois regulators have permitted
        utilities to recover prudently incurred unreimbursed investigation
        and remediation costs. 

        In 1994, the company filed a lawsuit against certain of its insurers
        to recover the costs of investigating and remediating the former coal
        gasification plants.  Eight insurers paid the company a total of $9.6
        million in 1995, 1996 and 1997 in order to be discharged from the
        lawsuit.  In 1997 the Iowa District Court granted the remaining
        insurers motions for summary judgment and dismissed the Company's
        claims against those defendants.  The Company has appealed this
        decision to the Iowa Supreme Court where the matter is currently
        pending.  As of December 31, 1997, $4.8 million is recorded as a
        deferred credit pending regulatory disposition.  Neither the company
        nor its legal counsel is able to predict the amount of any additional
        insurance recovery, and no potential recovery has been recorded.

        Under the Federal Comprehensive Environmental Response, Compensation
        and Liability Act (CERCLA), a past waste generator can be designated
        by the United States Environmental Protection Agency (U.S. EPA) as a
        Potentially Responsible Party (PRP).  Certain types of used
        transformer oil (primarily those containing polychlorinated
        biphenyls, or "PCBs") have been designated as hazardous substances by
        the U.S. EPA.

        In 1988, the U.S. EPA designated the company a PRP for the clean-up
        of former salvage facilities operated by the Missouri Electric Works,
        Inc. (MEW) in Cape Girardeau, Missouri.  A portion of the
        PCB-contaminated equipment found at the site was formerly owned by
        the company.  The company has notified the U.S. EPA that it disclaims
        responsibility for the site, as the equipment was in proper operating
        condition when sold by the company to a third party, which
        subsequently made arrangements to transport this equipment to MEW.
        The U.S. EPA has not responded to the company's disclaimer.  The
        company has not recorded any liability for the MEW site, and
        management believes that it will be able to successfully defend
        itself against any claims applicable to the site.


        (Employees)

        The company has 899 regular employees consisting of 872 full-time and
        27 part-time employees.  Labor unions represent 559 (or 62%) of the
        total work force.


        (Year 2000)

        The Merged Company (Refer to Part II, Item 5 or Exhibit 13 for
        further discussion of the Merger) utilizes software, embedded systems
        and related technologies throughout its businesses that will be
        affected by the date change in the Year 2000.  An internal task force
        has been assembled to review and develop the full scope, work plan
        and cost estimates to ensure that the merged Company's systems
        continue to meet its internal and customer needs.

        Phase I of the project has been completed which encompasses a review
        of the necessary software modifications that will need to be made to
        the Merged Company's financial and customer systems.  The Merged
        Company currently estimates that the remaining costs to be incurred
        on this phase of the project will be approximately $4 million to $8
        million in the aggregate.  The task force has also begun Phase II of
        the project which is an extensive review of the Merged Company's
        embedded operating systems for Year 2000 conversion issues.  The
        Merged Company is currently unable to estimate the costs to be
        incurred on this phase of the project but does believe that the costs
        will be significant.  An estimate of the expenses to be incurred on
        this phase of the project is expected to be available by the third
        quarter of 1998.


        (Accounting Matters)

        Statements of Position (SOP) 96-1 on environmental liabilities was
        issued by the American Institute of Certified Public Accountants in
        1996. The company has reviewed the requirements of the SOP and is in
        compliance with its provisions.


   ITEM 2.  PROPERTIES

        The principal power plants and other materially important physical
        properties of the company are maintained in accordance with sound
        operating practices.  Their general character and location are
        described below:


        (Electric Properties)

        The company has been a participant in the Mid-Continent Area Power
        Pool (MAPP) Agreement since March 31, 1972.  As a part of this power
        network the company is the owner of a 55.0 mile section of the 345 KV
        transmission line extending from St. Louis, Missouri to Minneapolis,
        Minnesota; a 15.5 mile section of the 345 KV transmission line
        between Minneapolis, Minnesota and Kansas City, Missouri; a 5.0 mile
        345 KV transmission line from near Clinton, Iowa to near Cordova,
        Illinois; a 49.8 mile 345 KV transmission line from near Clinton,
        Iowa to a substation south of Dubuque, Iowa; and three associated
        345/161 KV substations.

        The company's electric generating stations at year-end consist of six
        steam plants, three combustion turbine stations, and four internal
        combustion facilities.  Pertinent information regarding each electric
        generating station is shown on the following page:


   <TABLE>

                                            INTERSTATE POWER COMPANY GENERATING STATIONS
   <CAPTION>

                                                                                                            Net
                                    Generating Units                          December 31, 1997            Output
                                         Nameplate                               Capability                in KWH
                                 Unit    Capacity          Year             KW                KW           (000's)
   Location                      Number     KW         Installed         (Gross)             (Net)          1997   
   STEAM:  
   <S>                             <C>    <C>              <C>             <C>               <C>            <C>
   Dubuque, IA                     2      15,000           1929            82,500            78,000         67,260
                                   3      25,000           1952
                                   4      33,000           1959

   Clinton, IA                     1      15,000           1947           254,900           235,000        939,575
    (M.L.Kapp Plt.)                2     212,284           1967
   Lansing, IA                     1      15,000           1948           337,800           320,000        879,115
                                   2      11,500           1949
                                   3      33,000           1957
                                   4     252,649           1977

   Sherburn, MN                    1      11,500           1950           113,500           108,000        195,055
    (Fox Lake Plt.)                2      11,500           1951
                                   3      75,000           1962

   Sioux City, IA                 4*     125,924           1979           142,000           134,300        975,148
    (Neal Unit #4)
   Louisa County, IA             1**      27,400           1983            29,400            28,000        180,966
    (Louisa Unit #1)                                                   ----------        ----------      ---------
   TOTAL STEAM                                                            960,100           903,300      3,337,119
                                                                       ----------        ----------      ---------
   GAS TURBINE:                     
   Montgomery, MN                  1      26,535           1974            22,200            22,200            41 
   Sherburn, MN                    4      26,535           1974            21,300            21,300            374
    (Fox Lake Plt.)
   Mason City, IA                  1      37,520           1991            70,400            70,000          4,618
    (Lime Creek Plt.)              2      37,520           1991
                                                                       ----------        ----------     ----------

   TOTAL GAS TURBINE                                                      113,900           113,500          5,033
                                                                       ----------        ----------     ----------

   INTERNAL COMBUSTION:
   Dubuque, IA                     1       2,000           1966             4,600             4,600            (81)
                                   2       2,000           1966

   Hills, MN                       1       2,000           1996             4,000             4,000           (149) 
                                   2       2,000           1960

   Lansing, IA                     1       1,000           1970             2,000             2,000              4
                                   2       1,000           1971

   New Albin, IA                   1         685           1970               700               700            (58)
                                                                       ----------        ----------      ---------
   TOTAL INTERNAL COMBUSTION                                               11,300            11,300           (284)
                                                                       ----------        ----------      ---------
   TOTAL COMPANY                                                        1,085,300         1,028,100      3,341,868
                                                                       ==========        ==========      =========



   *    Interstate owns 21.528% of a 584,931 KW unit (turbine rating) operated by MidAmerican Energy Company.
   **   Interstate owns 4.0% of a 685,000 KW unit (turbine rating) operated by MidAmerican Energy Company.

   </TABLE>

   (Gas Properties)

        The company owns and operates natural gas distributing systems in
        Albert Lea, Minnesota; Savanna, Illinois; Clinton, Mason City and
        Clear Lake, Iowa and in a number of smaller Minnesota, Illinois and
        Iowa communities.  At Albert Lea, the company owns 14 tanks with a
        liquid propane storage capacity of 357,000 gallons; at Clinton, there
        are 12 tanks with 306,000 gallons capacity and at Mason City, 22
        tanks with 561,000 gallons capacity.

        During 1996, in response to a request from the company's largest gas
        customer to increase its firm contract from 35,000 MMBtu/d to 50,000
        MMBtu/d, the company began construction of approximately 13.5 miles
        of 10" steel pipeline.  The project was completed and placed into
        service on November 25, 1996. 

        The company owns 47 gas regulating stations and approximately 992
        miles of gas distribution mains.


        (General Properties)

        The company owns numerous properties in various parts of its
        territory which are used for office, service and other purposes.  The
        most important of these are three General Office buildings in Dubuque
        and the district office buildings at Clinton, Decorah, Dubuque, Mason
        City and Oelwein, Iowa and Albert Lea, and Winnebago, Minnesota and
        the distribution service buildings in each of those locations.  The
        company, as lessee, leases office space at various locations.  The
        company also leases a few small parcels of land for storage of poles
        and miscellaneous temporary uses.


        (Titles)

        In the opinion of legal counsel for the company, the company has
        satisfactory title to its properties for use in its utility
        businesses subject only to permitted liens as defined in the Bond
        Indenture and to minor defects and encumbrances customarily found in
        cases of like size and character and which do not materially
        interfere with the use of such properties.

        Properties such as electric transmission and electric and gas
        distribution lines are constructed principally on rights-of-way which
        are maintained under franchise or held by easement only.

        All properties of the company, other than "excepted property" as
        defined in the Bond Indenture, are subject to the lien of the
        company's Bond Indenture dated as of January 1, 1948, as
        supplemented, securing the company's outstanding First Mortgage
        Bonds.


   ITEM 3.  LEGAL PROCEEDINGS

        Reference is made to "Electric Competitive Conditions" and
        "Environmental Regulations" under "Item 1. Business" for certain
        pending legal proceedings and proceedings known to be contemplated by
        governmental authorities.  Other than these items, there are no
        material pending legal proceedings, or proceedings known to be
        contemplated by governmental authorities, other than ordinary routine
        litigation incidental to the business, to which the company is a
        party or of which any of the company's property is the subject.

   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        There was no submission of matters to a vote of security holders
        during the fourth quarter of the 1997 year.


                                     PART II

   ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
            MATTERS

        (Proposed Merger)

        WPL Holdings, Inc. (WPLH), IES Industries, Inc. (IES) and Interstate
        Power Company (IPC) have entered into an Agreement and Plan of Merger
        dated November 10, 1995, as amended May 22, 1996 and August 16, 1996,
        (Merger Agreement), which provides for the combination of all three
        companies.  The new company will be named Interstate Energy
        Corporation (IEC).  See Note 2 of "Notes to Consolidated Financial
        Statements" for additional information. Detailed pro forma financial
        statements for IEC are included at EX-99.1.

        IES is a holding company headquartered in Cedar Rapids, Iowa, and is
        the parent company of IES Utilities Inc. (IES Utilities) and IES
        Diversified Inc. (IES Diversified).  IES Utilities supplies electric
        and gas service to approximately 339,000 and 178,000 customers,
        respectively, in Iowa.  IES Diversified and its principal
        subsidiaries are primarily engaged in the energy-related,
        transportation and real estate development businesses.  WPLH is a
        holding company headquartered in Madison, Wisconsin, and is the
        parent company of Wisconsin Power and Light Company (WP&L) and
        Heartland Development Corporation (HDC).  WP&L supplies electric and
        gas service to approximately 393,000 and 155,000 customers,
        respectively, in south and central Wisconsin.  HDC and its principal
        subsidiaries are engaged in business in three major areas:
        environmental, energy and affordable housing services.

        The proposed merger, which will be accounted for as a pooling of
        interests, was approved by the respective Boards of Directors and
        shareholders on September 5, 1996.  The merger is conditioned on the
        receipt of approvals of several federal and state regulatory
        agencies.  The status of these approvals is as follows:

        The status of these approvals is as follows:  On March 24, 1997, the
        Minnesota Public Utilities Commission issued an order approving the
        merger without hearings, subject to a number of technical conditions
        that the parties are willing to meet.  Included is a 4-year rate
        freeze for IPC's Minnesota customers.  On May 7, 1997, the Illinois
        Commerce Commission (ICC) issued an order approving the proposed
        merger.  Included is a three-year rate freeze for IPC's Illinois
        customers.  On September 26, 1997, the Iowa Utilities board (IUB)
        issued its order granting final approval of the proposed merger.  The
        order included a four-year rate freeze for Iowa customers.  On
        November 4, 1997, the Public Service Commission of Wisconsin (PSCW)
        granted approval of the proposed merger.  The approval include a
        number of conditions, including a four-year rate freeze.  The Federal
        Energy Regulatory Commission (FERC) approved the merger on November
        12, 1997.  The Securities and Exchange Commission (SEC) comment
        period ended November 5, 1996.  Approval by the SEC is still pending. 
        An impact review of the merger on market power, which is required by
        the Hart-Scott-Rodino Antitrust Improvements Act, was completed by
        the Department of Justice(DOJ) in 1997.  All requirements of the
        review were satisfied.

        The companies expect to receive final decisions on all outstanding
        regulatory approvals relating to the merger in 1998.

   For information pertaining to common stock market data required by Item
   201 of Regulation S-K please refer to page 33 of Exhibit EX-13.


   ITEM 6.  SELECTED FINANCIAL DATA

        For information pertaining to selected financial data required by
        Item 301 of Regulation S-K please refer to page 32 of Exhibit EX-13.


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

        For information pertaining to management's discussion and analysis
        required by Item 303 of Regulation S-K please refer to pages 1 
        through 8 of Exhibit EX-13. 


   ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        Financial statements and supplementary data incorporated by reference
        to Exhibit EX-13.

   Statements of Income                     Page  9        
   Balance Sheets                           Pages 10 & 11
   Statements of Cash Flows                 Page  12   
   Statements of Capitalization             Page  13  
   Statements of Retained Earnings          Page  14
   Notes to Financial Statements            Pages 15 to 29
   Independent Auditors' Report             Page  30


   ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        None

   <PAGE>

                                    PART III

   ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        Name               Age             Offices Held Past 5 Years

        M. R. Chase        59    5-7-91  - Vice President-Power Production
                                 7-1-95  - Executive Vice President
                                10-1-96  - President & Chief Operating 
                                           Officer
                                 1-1-97  - President & Chief Executive 
                                           Officer

        R. R. Ewers        53    5-1-90  - Vice President-Administrative
                                           Services
                                 7-1-95  - Vice President-Administration

        D. E. Hamill       61    9-1-80  - Vice President-Budgets &
                                           Regulatory Affairs
                                           (Retired 2-28-98)

        J. C. McGowan      60    2-1-89  - Secretary & Treasurer

        R. P. Richards     61    1-1-91  - Vice President-Gas Operations
                                           (Retired 2-28-98)

        D. R. Sharp        57    7-1-95  - Vice President-Power Production 
                                 1-1-96  - Vice President-Engineering

        W. C. Troy         59    5-1-86  - Controller

       
        All officers are elected and serve as such until the next annual
        meeting of directors.  There are no arrangements or understandings
        with respect to election of any person as an officer.

        For information pertaining to directors, and other data required by
        Items 401 and 405 of Regulation S-K, refer to Exhibit 99.6.



   ITEM 11. EXECUTIVE COMPENSATION

        Refer to information on pages 3 to 6 of Exhibit 99.6.

   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        Refer to information on page 6 and 7 of Exhibit 99.6.

   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Transactions with Management and Others:

        In 1997 there were no transactions and there are presently proposed
        no transactions with management, to which the company or its
        subsidiary was or is to be a party, of the character as to which
        answer is called for in response to Item 404(a) of Regulation S-K.

        Indebtedness of Management:

        No director or officer, or nominee for election as a director, or any
        associate of any thereof, was indebted to the company or its
        subsidiary during 1997, as to which answer is called for in response
        to Item 404(b) of Regulation S-K.


   <PAGE>

                                     PART IV

   ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

        (a)    List of documents filed as part of this report:

                           1.   The financial statements, including
                   supporting schedules, are listed in the Index to Financial
                   Statements, Schedules and Exhibits filed as part of this
                   Annual Report.

                           2.   Exhibits which are filed herewith, including
                   those incorporated by reference are listed in the Index to
                   Financial Statements, Schedules and Exhibits filed as part
                   of this Annual Report.

        (b)    Reports on Form 8-K:

               No reports on Form 8-K were filed with the Securities and
               Exchange Commission during the last quarter of 1997.  

        (c)    Refer to Index to Exhibits commencing on page 20.

        (d)    The Unaudited Pro Forma Combined Financial Information of
               Interstate Energy Corporation is filed herewith as EX-99.1.


   INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS

   The 1997, 1996 and 1995 financial statements, together with the
   Independent Auditors' Report thereon of Deloitte & Touche LLP, dated
   January 29, 1998, appearing on pages 9 through 29 of Exhibit EX-13, are
   incorporated in this Form 10-K Annual Report.  The following additional
   data, as attached on EX-23 and S-1 should be read in conjunction with the
   financial statements in such Exhibit EX-13.

   Schedules and other historical financial information not included with
   this additional financial data have been omitted because they are not
   applicable or the required information is shown in the financial
   statements or notes thereto.


                                                   Page or Exhibit Reference 
                                                                  

                                                     Form
                                                     10-K      ExhibitEX-13

   Consent of Independent Auditors                   EX-23

   Financial Statements:
     Statements of Income for the years ended 
       December 31, 1997, 1996 and 1995                             9
     Balance Sheets as of December 31, 1997 and 1996                10 & 11
     Statements of Cash Flows for the years ended 
       December 31, 1997, 1996 and 1995                             12
     Statements of Capitalization as of December 31, 
       1997 and 1996                                                13
     Statements of Retained Earnings for the years
       ended December 31, 1997, 1996 and 1995                       14 
     Notes to Financial Statements                                  15 - 29
     Selected Financial Data                                        32
     Common Stock Market Data                                       33 

   Management's Discussion and Analysis                             1 - 8

   Schedule II:  Valuation and Qualifying Accounts
                         and Provisions                 27

   Report of Independent Auditors                       28 


   Exhibit
   Number    Description of Exhibit

   2.1       Agreement and Plan of Merger, dated as of November 10, 1995, by
             and among WPL Holdings, Inc., IES Industries Inc., Interstate
             Power Company and AMW Acquisition, Inc. (incorporated by
             reference to Exhibit 2.1 to the Form 8-K of Interstate Power
             Company, a Delaware corporation, dated November 10, 1995).  **

   2.2       Amendment No. 1 to the Agreement and Plan of Merger and Stock
             Option Agreements, dated May 22, 1996, by and among WPL
             Holdings, Inc., IES Industries Inc., Interstate Power Company,
             AMW Acquisition, Inc., WPLH Acquisition Co. and Interstate Power
             Company (incorporated by reference to Exhibit 2.1 to the Form 8-
             K of Interstate Power Company, a Delaware corporation, dated May
             22, 1996).  **

   2.3       Amendment No. 2 to the Agreement and Plan of Merger, as amended,
             dated August 16, 1996, by and among WPL Holdings, Inc., IES
             Industries, Inc., Interstate Power Company, WPLH Acquisition Co.
             and Interstate Power Company (incorporated by reference to
             Exhibit 2.1 to the Form 8-K of Interstate Power Company, a
             Delaware corporation, dated August 23, 1996).  **

   3.(i).1   Restated Certificate of Incorporation of Interstate Power
             Company as originally filed April 18, 1925 and as amended 
             effective through October 21, 1993.   **

   3.(i).2   Certificate of Amendment to the Restated Certificate of
             Incorporation of Interstate Power Company, effective March 4,
             1997.   **

   3.(i).3   IPC Development Co. Articles of Incorporation, State of Iowa
             dated May 24, 1978 (physically filed in Form 10-K for the Year
             Ended December 31, 1978 as EXHIBIT G).   **

   3.(ii).1  By-Laws of Interstate Power Company as adopted April 20, 1925
             and as amended October 1, 1996 (filed in Form 10-Q for the
             Quarter Ended September 30, 1996 as EX-3.(ii)).   **

   3.(ii).2  IPC Development Co. By-Laws adopted May 10, 1978 (physically
             filed in Form 10-K for the Year Ended December 31, 1978 as
             EXHIBIT H).   **

   4.1       The Original through the Nineteenth Supplemental Indentures of
             Interstate Power Company to The Chase Manhattan Bank and Carl E.
             Buckley and C. J. Heinzelmann, as Trustees, dated January 1,
             1948 securing First Mortgage Bonds (physically filed in
             Registration Statement No. 33-59352 dated March 11, 1993 under
             the Securities Act of 1933 as Exhibits (4)(b) through 
             (4)(t)).   **

   4.2       Twentieth Supplemental Indenture of Interstate Power Company to
             The Chase Manhattan Bank and C. J. Heinzelmann, as Trustees,
             dated May 15, 1993 (physically filed in Registration Statement
             No. 33-59352 dated March 11, 1993 under the Securities Act of
             1933 as Exhibit (4)(u)).   **

   4.3       Dividend Reinvestment and Stock Purchase Plan filed on 
             Form S-3 covering the registration of 500,000 shares of Common
             Stock, dated May 11, 1993 (physically filed in Registration
             Statement  No. 33-62644 under the Securities Act of 1933).   **  

    
   4.4       Post-Effective Amendment No. 1 to Registration Statement No. 33-
             62644, Dividend Reinvestment and Stock Purchase Plan, providing
             for expansion of the safekeeping option in the Plan, dated
             December 19, 1996 and effective December 31, 1996 (filed in Form
             S-3 on December 19, 1996).   **

   4.5       Guaranty Agreement between Interstate Power Company and Commerce
             Union Bank as Trustee dated as of December 1, 1973 (City of
             Dubuque, Iowa $4,400,000 Pollution Control Revenue Bonds)
             (physically filed in Registration Statement No. 2-50685 as
             EXHIBIT 5-GG.1a).   **

   4.6       Security Agreement dated as of December 1, 1973 between
             Interstate Power Company (Guarantor) and Commerce Union Bank
             (Trustee) (City of Dubuque, Iowa $4,400,000 Pollution Control
             Revenue Bonds) (physically filed in Registration Statement No.
             2-50685 as EXHIBIT 5-GG.1b).   **

   4.7       Guaranty Agreement between Interstate Power Company and Commerce
             Union Bank as Trustee dated as of December 1, 1973 (Town of
             Lansing, Iowa $3,700,000 Pollution Control Revenue Bonds)
             (physically filed in Registration Statement No. 2-50685 as
             EXHIBIT 5-GG.2a).   **

   4.8       Security Agreement dated as of December 1, 1973 between
             Interstate Power Company (Guarantor) and Commerce Union Bank
             (Trustee) (Town of Lansing, Iowa $3,700,000 Pollution Control
             Revenue Bonds) (physically filed in Registration Statement No.
             2-50685 as EXHIBIT 5-GG.2b).   **

   4.9       Guaranty Agreement between Interstate Power Company and Commerce
             Union Bank as Trustee dated as of December 1, 1973 (City of
             Clinton, Iowa $900,000 Pollution Control Revenue Bonds)
             (physically filed in Registration Statement No. 2-50685 as
             EXHIBIT 5-GG.3a).   **

   4.10      Security Agreement dated as of December 1, 1973 between
             Interstate Power Company (Guarantor) and Commerce Union Bank
             (Trustee) (City of Clinton, Iowa $900,000 Pollution Control
             Revenue Bonds) (physically filed in Registration Statement No.
             2-50685 as EXHIBIT 5-GG.3b).   **

   4.11      Registration Statement No. 33-32529 on Form S-8 covering the
             registration of $10,000,000 of participation interests,
             including the registration of up to 402,010 shares of Common
             Stock, par value $3.50 per share, of Interstate Power Company
             pursuant to its 401(k) Plan (filed with the Commission on
             December 12, 1989).   **

   4.12      Statement regarding availability upon request of Loan Agreement
             and Pollution Control Indenture (filed in Form 10-K for the Year
             Ended December 31, 1994 as EX-4).   **

   10.1 P    Gas Portfolio Management and Sales Contract between Interstate
             Power Company and MidCon Gas Services Corp. filed under Form SE
             as confidential and non-public.   **

   10.2      Mid-Continent Area Power Pool (MAPP) Restated Agreement dated
             January 12, 1996.   **

   10.3      Mid-Continent Area Power Pool (MAPP) Center Agreement dated
             December 2, 1996.   **

   10.4      Participation Power and Block Energy Agreement between United
             Power Association and Interstate Power Company, dated August 7,
             1991 (physically filed in Form 10-K for the Year Ended December
             31, 1991 as EXHIBIT F).   **

   10.5      Unit Participation Power Agreement between Iowa Public Service
             Company and Interstate Power Company, dated August 12, 1991
             (physically filed in Form 10-K for the Year Ended December 31,
             1991 as EXHIBIT G).   **

   10.6      Unit Participation Power Agreement between Minnesota Power and
             Interstate Power Company, dated August 14, 1991  (physically
             filed in Form 10-K for the Year Ended December 31, 1991 as
             EXHIBIT H).   **

   10.7      Mid-Continent Area Power Pool Agreement Amendment dated January
             1, 1991 (physically filed in Form 10-K for the Year Ended
             December 31, 1991 as EXHIBIT I).   **

   10.8      Mid-Continent Area Power Pool Coordination Center Agreement
             dated September 18, 1990 (physically filed in Form 10-K for the
             Year Ended December 31, 1991 as EXHIBIT J).   **

   10.9      Coal Transportation Agreement ICC-BN-C-2536 between Interstate
             Power Company and Burlington Northern Railroad Company dated
             February 21, 1990 (physically filed in Form 10-K for the Year
             Ended December 31, 1990 as EXHIBIT D).   **

   10.10     Third Amended and Restated Coal Supply Agreement between
             Interstate Power Company and AMAX Coal Company and a fully
             executed Release and Discharge Agreement for the previous
             Agreement and Amendments. Both dated April 9, 1990 (physically
             filed in Form 10-K for the Year Ended December 31, 1990 as
             EXHIBIT E).   **

   10.11     Coal Transshipment Agreement by and between Interstate Power
             Company and Orba-Johnson Transshipment Company dated December
             20, 1979 (physically filed in Form 10-K for the Year Ended
             December 31, 1979 as EXHIBIT F, and filed in Form 10-K/A for the
             Year Ended December 31, 1995 as EX-10.b).   **

   10.12     Coal Transloading Agreement between Interstate Power Company and
             Orba-Johnson Transshipment Company dated December 20, 1995
             (filed in Form 10-K/A for the Year Ended December 31, 1995 as
             EX-10.a).   **

   10.13     Barge Transportation Agreement dated March 1, 1990 between
             Orgulf Transport Company and Interstate Power Company for the
             shipment of coal from the Orba-Johnson Transshipment Terminal
             near Keokuk, Iowa to the Unit 4 power-generating facility at
             Lansing, Iowa (physically filed in Form 10-K for the Year Ended
             December 31, 1990 as EXHIBIT J).  **

   10.14     Coal Supply Agreement between Interstate Power Company and
             Powderhorn Coal Company filed under Form SE as confidential and
             non-public (filed in Form 10-K for the Year Ended December 31,
             1994 as EX-10.a).   **

   12        Statement re Computation of Ratios.   *

   13        The Company's 1997 Financial Statements, Management's Discussion
             and Analysis, Selected Financial Data and Common Stock Market
             Data.   *

   23        Consent of Independent Auditors.   *

   27        Financial Data Schedule (required for electronic filing only in
             accordance with Item 601 (c) (1) of Regulation S-K).   *

   99.1      Unaudited Pro Forma combined Financial Information of Interstate
             Energy Corporation. *

   99.2      Summary Plan Description for the Interstate Power Company 401(k)
             Plan dated November 30, 1993 (filed in Form 10-K for the Year
             Ended December 31, 1993 as EX-99.c).   **

   99.3      Interstate Power Company Irrevocable Trust Agreement dated April
             30, 1990 (filed in Form 10-K for the Year Ended December 31,
             1993 as EX-99.f).   **

   99.4      Interstate Power Company Amended Deferred Compensation Plan as
             amended through January 30, 1990 (filed in Form 10-K for the
             Year Ended December 31, 1993 as EX-99.e).   **

   99.5      Interstate Power Company Supplemental Retirement Plan as amended
             and restated November 10, 1995 and December 9, 1997. *

   99.6      Supplemental information re: Directors and Executive officers as
             required by Regulation S-K. *

   99.7      Interstate Power Company Irrevocable Trust Agreement dated
             December 1997.*

   *    Filed Herewith
   **   Previously Filed

   <PAGE>
                                   SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
   Exchange Act of 1934, the registrant has duly caused this report to be
   signed on its behalf by the undersigned, thereunto duly authorized.


                                          INTERSTATE POWER COMPANY


   Date    March 27, 1998                 By    /s/ M. R. CHASE       
                                           (M. R. Chase,    
                                           President and Chief
                                           Executive Officer)


   Pursuant to the requirements of the Securities Exchange Act of 1934, this
   report has been signed below by the following persons on behalf of the
   registrant and in the capacities and on the date indicated.

        Signature                          Title                  

   /s/ M. R. CHASE               President and Chief Executive   
      (M. R. Chase)              Officer (Principal Executive
                                 Officer and Principal 
                                 Financial Officer)

   /s/ W. C. TROY                Controller (Principal           
      (W. C. Troy)               Accounting Officer)
                   
   /s/ W. H. STOPPELMOOR         Chairman of the Board
      (W. H. Stoppelmoor

   /s/ A. B. ARENDS              Director
      (A. B. Arends)       
                   
   /s/ J. E. BYRNS               Director
      (J. E. Byrns)      
                          
   /s/ A. D. CORDES              Director
      (A. D. Cordes)

   /s/ J. L. HANES               Director                 
      (J. L. Hanes)          
                   
   /s/ G. L. KOPISCHKE           Director
      (G. L. Kopischke)    
                   


   Date   March 27, 1998

   <PAGE>

   <TABLE>

                                                                                                                     SCHEDULE II

                                                      INTERSTATE POWER COMPANY

                                          VALUATION AND QUALIFYING ACCOUNTS AND PROVISIONS
                                        FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
   <CAPTION>


                                               (Thousands of Dollars)                          
   COLUMN A                            COLUMN B                      COLUMN C                COLUMN D         COLUMN E
                                                 
                                                                    ADDITIONS     
                                      BALANCE AT           CHARGED             CHARGED        DEDUCTION       BALANCE 
                                      BEGINNING              TO               TO OTHER         FROM           AT END  
  DESCRIPTION                          OF YEAR             INCOME             ACCOUNTS        RESERVES        OF YEAR 
   <S>                               <C>                    <C>                <C>             <C>            <C>
   YEAR ENDED DEC. 31, 1997
    Valuation account 
    deducted from caption
    of which it applies -
    accumulated provision
    for doubtful accounts                   $200                $285              $172(a)        $457 (b)        $200
                                     ===========            ========           =========       =========      =======

    Provision for medical 
    benefits, injuries 
    and damages                           $3,025              $5,069              $568         $5,709 (c)      $2,953
                                     ===========            ========           =========       =========      =======

   YEAR ENDED DEC. 31, 1996
    Valuation account 
    deducted from caption
    of which it applies -
    accumulated provision
    for doubtful accounts                   $200                $277              $143(a)        $420 (b)        $200
                                       =========          ==========          ==========      ==========    =========

    Provision for medical 
    benefits, injuries 
    and damages                           $4,682              $6,469            $1,215         $9,341 (c)      $3,025
                                       =========          ==========          ==========      ==========    =========

   YEAR ENDED DEC. 31, 1995
    Valuation account 
    deducted from caption
    of which it applies -
    accumulated provision
    for doubtful accounts                   $200                $169              $144(a)        $313 (b)        $200
                                       =========          ==========          ==========      ==========    =========

    Provision for medical 
    benefits, injuries 
    and damages                           $4,671              $5,729            $1,081         $6,799 (c)      $4,682
                                       =========          ==========          ==========      ==========    =========

   (a) Recoveries on accounts previously written off.
   (b) Accounts written off.
   (c) Claims and damages paid and expenses in connection therewith.

   </TABLE>

   <PAGE>

   INDEPENDENT AUDITORS' REPORT


   Interstate Power Company:

   We have audited the financial statements of Interstate Power Company as of
   December 31, 1997 and 1996, and for each of the three years in the period
   ended December 31, 1997, and have issued our report thereon dated January
   29, 1998; such financial statements and report are included elsewhere in
   this Form 10-K Annual Report.  Our audits also included the financial
   statement schedule of Interstate Power Company, listed in Item 14.  This
   financial statement schedule is the responsibility of the Company's
   management.  Our responsibility is to express an opinion based on our
   audits.  In our opinion, such financial statement schedule, when
   considered in relation to the basic financial statements taken as a whole,
   presents fairly, in all material respects, the information set forth
   therein.


   /s/ Deloitte & Touche LLP

   Deloitte & Touche LLP
   Davenport, Iowa

   January 29, 1998


   <PAGE>


   INDEX OF EXHIBITS FILED HEREWITH:



   EX-12           Statement re Computation of Ratios

   EX-13           The Company's 1997 Financial Statements, Management's 
                   Discussion and Analysis, Selected Financial Data
                   and Common Stock Market Data

   EX-23           Consent of Independent Auditors

   EX-27           Financial Data Schedule (required for electronic filing
                   only in accordance with Item 601 (c) (1) of Regulation 
                   S-K)

   EX-99.1         Unaudited Pro Forma Combined Financial Information of
                   Interstate Energy Corporation

   EX-99.5         Interstate Power Company Supplemental Retirement Plan
                   as amended and restated November 10, 1995 and 
                   December 9, 1997

   EX-99.6         Information regarding Directors and Executive Officers
                   required by Regulation S-K under Items 10, 11 and 12.

   EX-99.7         Interstate Power Company Irrevocable Trust Agreement dated
                   December 1997.